Focus on Wednesday's final EZ CPI - BBH

Global Currency Strategy Team at Brown Brothers Harriman & Co. (BBH) offered a brief preview for the upcoming release of the final EZ CPI print on Wednesday. 

Key quotes:

“The euro rose for the fourth session yesterday and approached $1.23.  Today, the pullback took place mostly in the European morning.  Initial support is seen in the $1.2180 area.  News from the eurozone is light.  Germany and Italy confirmed their December inflation readings ahead of the aggregate report tomorrow.”

“Much of the discussion of the ECB stance, including the record from the December meeting that the market read so hawkishly, was before the preliminary release of the December CPI.  Recall that it was softer than expected.  The headline eased to 1.4% from 1.5%, but it was the flat core rate at 0.9% that was most disappointing.  Recall that the core measure bottomed at 0.6%.  The core rate jumped to 1.2% in early Q2 17 and returned to it in early Q3, but has returned to the middle of its four-year range.”